Apple and Samsung have been in a legal tussle over smartphone patents since a few months now, with Apple alleging that Samsung blatantly copied the iPhone and the iPad to create the Galaxy line of smartphones and tablets.
Now if these were any two other companies, you would expect them to be bitter enemies and at the very least, stop conducting any business with each other. But while Apple and Samsung are both quite bitter, they surely haven’t ended their business relationship.
It’s because Samsung is one of the largest component suppliers for Apple’s products. It makes a lot of what makes Apple products work – displays, processors, flash memory etc. Samsung apparently sold Apple $5.7 billion worth of components last year, according to a Reuters report. So it’s not like only Apple is dependent on Samsung; even Samsung relies on Apple for a large portion of its total sales. Apple is Samsung’s second largest customer.
While Apple may be trying to find alternative sources for the components that power its devices, it’s not that easy. There are very few companies that could manage that kind of volume. Apple has been trying to diversify and spread out its suppliers, so that no one supplier has any leverage over Apple. Apple cannot afford to have its supply chain being held hostage by any one supplier; with the enormous demand for Apple products, any supply shortages would mean a lot of lost sales.
Apple has so far turned to Taiwan for most of its manufacturing and component needs, with companies like Foxconn, Quanta, Pegatron, Innolux and TSMC.
But Samsung still remains an indispensable partner, which is probably why Apple is still continuing its business relationship with it.
Both of them make a lot of money off each other. That’s probably why Tim Cook still considers Samsung “valuable component supplier” even though their mobile unit “crossed the line.” In the end, it’s all just good business.
References: Reuters
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